Aerospace Notebook: Everett company lands on both feet

Published 9:00 pm, Tuesday, October 29, 2002

When The Boeing Co. finally found a home for 22 unwanted American Airlines 717s, the news was warmly welcomed by a small aerospace company in Everett.

Bucher Aerospace had been "crushed," one of its engineers said, when American acquired bankrupt TWA last year and soon canceled the remaining 20 unfilled 717 orders left on the TWA books. That represented a lot of lost business for Bucher Aerospace, which had the exclusive contract to supply galleys and spares for the 50 717s that had been ordered by TWA.

American also returned to Boeing 24 of the 717s that had already been delivered to TWA or that were about to be delivered. Some of those planes had never carried passengers. (The other six TWA 717s acquired by American ended up with a leasing company and are now flying with the Australian low-fare carrier Qantas Link, formerly known as Impulse.)

The American 717s returned to Boeing have been parked in the high desert near Victorville, Calif., waiting for a new home.

Last week, Orlando-based low-fare carrier AirTran, launch customer for the 717 (formerly known as the McDonnell Douglas MD-95), announced it had agreed to lease 22 of the American 717s from Boeing Capital Co..

For Bucher Aerospace, the wheel had come full circle -- it is also the sole supplier of galleys for AirTran's 717s.

Because the TWA and AirTran 717s have much different interior configurations, Bucher will now redo the galleys in those 22 planes headed for AirTran.

"As things turned out, it was not too terrible a hit that we took," said Hans Bretscher, chief executive of Bucher Aerospace.

"We were lucky."

Bucher Aerospace has its roots in the Swiss company Bucher Leichtbau AG founded in 1953 by Heinrich Bucher, a pioneer in civil aviation. The sister company was started in Everett in 1989 with three employees. Today, Bucher Aerospace has more than 50 workers.

In addition to galleys, Bucher Aerospace makes airplane food carts and airplane video systems for airlines such as Delta, American, Korean Air and Asiana.

Boeing's top breadwinner no more. It didn't get much attention when Boeing announced its third-quarter earnings two weeks ago, but the company's once dominating commercial airplanes business was no longer its top breadwinner.

Commercial airplanes, as a result of fewer airplane deliveries, accounted for revenue of $6.1 billion during the quarter, compared with the $6.5 billion generated by Boeing's combined military and space business.

Industry analysts can't remember the last time commercial airplanes generated less than half the company's total sales during a quarter or for the full year. It may have been during the war years of the 1940s.

"It is certainly the first time since God knows when," said Paul Nisbet of JSA Research. "It was so long ago as not to even be comparable."

For the first nine months of the year, commercial had about 55 percent of the company's total revenue and will stay above 50 percent for the full year.

But 2002 could be the last time it will do so, at least for a while.

Boeing will deliver 380 jets this year, down from 527 last year. But deliveries will fall to no more than 285 next year and remain flat in 2004, Boeing has said.

Boeing commercial gets about 70 percent of its money for a new plane upon delivery. So it will be a while before production is high enough again that commercial will take its customary head place at the revenue table.

For 2003, Nisbet is forecasting commercial revenue of $21.4 billion against companywide sales of $49.8 billion.

"It could be a very long time before commercial jumps above 50 percent again," Nisbet said. "At least six or seven years."

By the time the commercial business comes back, Nisbet said, it may be too late to overtake the expected growth in space and defense that will have occurred in the meantime.

Until 1996, commercial accounted for about 80 percent of Boeing's total revenue.

But that was the year Boeing executives began to transform the world's largest airplane maker into the world's largest aerospace company with the acquisition of Rockwell's space business.

The next year, Boeing acquired defense company McDonnell Douglas.

The aim of this transformation has been to make Boeing more immune from the cyclical downturns of the airplane industry as well as to take advantage of better growth opportunities in defense and space.

Boeing Chairman Phil Condit said the company is "much better balanced" than ever before and thus can stay profitable while riding out the industry's worst-ever downturn.

"To have a broader base of revenue was in the best interest of the company," he said.

"That decision was made in 1996, not anticipating the scale of what we are looking at right now. But I'm delighted we did what we did."